The opinion of the court was delivered by: Chief Judge Curtis L. Collier
On September 20, 2005, Steven Lynn Haley and Rachel Haley's ("Plaintiffs") complaint against Lowe's Home Centers, Inc. and Connecticut General Life Insurance Company ("Defendants") was removed to this Court pursuant to 28 U.S.C. § 1441 (Court File No. 1). After Defendants filed a response (Court File No. 5) and submitted the relevant administrative record (Court File No. 7), Plaintiffs submitted an objection to the administrative record (Court File No. 9). Defendants then submitted a Motion for Judgment on the Record (Court File No. 12). Plaintiffs responded with a brief in opposition to Defendants' motion and maintained the administrative record was insufficient (Court File No. 15).
This is a case where Plaintiff seeks benefits from Lowe's Affiliates Group Health Plan ("The Plan") and brings this action under 29 U.S.C. § 1132(a)(1)(B). The Plan is an employee benefit plan governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § § 1001-1461. Because the subject matter involves a federal question and arises under ERISA, this Court has jurisdiction pursuant to 28 U.S.C. § 1331 and 29 U.S.C. § 1132(e).
The Court set the matter for oral argument on August 9, 2006. Counsel for Plaintiffs failed to appear at the hearing. Upon motion of counsel for Defendant, the Court dismissed the case pursuant to Fed.R.Civ.P. 41(b). Subsequently, counsel for Plaintiffs asked for reconsideration of the Court's order of dismissal arguing he did not receive notice of the meeting. Thereafter, the Court set aside its order of dismissal and rescheduled oral argument for Wednesday, February 14, 2006.
At the oral argument hearing, counsel for Plaintiffs argued the administrative record was insufficient and it did not contain a record of denial of benefits. Counsel for Plaintiffs conceded Plaintiffs did not make premium payments as argued by Defendants. Counsel for Defendants argued Plaintiffs failed to pay their required premiums for coverage and after repeated warnings, simply lost their coverage.
After carefully considering the arguments advanced at the hearing, as well as in the filings, and considering the applicable law, the Court will GRANT Defendants' motion for judgment on the record (Court File No. 12). Further, the Court will DISMISS Plaintiffs' claims and DIRECT the Clerk of Court to CLOSE this case.
Since this is an ERISA case involving denial of benefits, the Court's review is limited. In Wilkins v. Baptist Healthcare Sys. Inc., 150 F.3d 609 (6th Cir. 1998), the United States Court of Appeals for the Sixth Circuit ("Sixth Circuit") set forth "suggested guidelines" for adjudicating ERISA benefit denial proceedings brought under § 1132(a)(1)(B). Id. at 619 (Gilman, J., concurring) (delivering the opinion of the panel as to the applicability of summary judgment proceedings to ERISA cases). The proper procedure for adjudicating a § 1132(a)(1)(B) action is in the nature of a review of the administrator's decision at issue, not of a bench trial or a summary judgment determination. A bench trial, during which a court might evaluate evidence not before the plan administrator, would thwart Congress's goal of using ERISA "to provide a method for workers and beneficiaries to resolve disputes over benefits inexpensively and expeditiously" through an administrative procedure. Id. at 618 (quoting Perry v. Simplicity Eng'g, 900 F.2d 963, 967 (6th Cir. 1990)). Likewise, a summary judgment procedure is inapposite because the goal of its analysis is "to screen out cases not needing a full factual hearing." Id. at 619. Rather, a district court should review a benefits denial decision based "solely upon the administrative record" and "render findings of fact and conclusions of law accordingly." Id. "The district court may consider evidence outside of the administrative record only if that evidence is offered in support of a procedural challenge to the administrator's decision, such as an alleged lack of due process afforded by the administrator or alleged bias on its part." Id.
A denial of benefits decision "is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956-57, 103 L.Ed. 2d 80 (1989). When discretionary authority is granted, "the highly deferential arbitrary and capricious standard of review is appropriate." Borda v. Hardy, Lewis, Pollard & Page, P.C., 138 F.3d 1062, 1066 (6th Cir. 1998) (quotation marks and citation omitted). Regarding the arbitrary and capricious standard, the Sixth Circuit explained "[t]his standard 'is the least demanding form of judicial review of administrative action . . . . When it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome, that outcome is not arbitrary or capricious.'" Abbott v. Pipefitters Local Union No. 522 Hosp., Med. & Life Benefit Plan, 94 F.3d 236, 240 (6th Cir. 1996) (quoting Perry v. United Food & Commercial Workers Dist. Unions 405 & 422, 64 F.3d 238, 242 (6th Cir. 1995)). Under the arbitrary and capricious standard, the plan administrator's decision will be upheld if it was "rational in light of the plan's provisions," Smith v. Ameritech, 129 F.3d 857, 863 (6th Cir. 1997), and was not made in bad faith. Adcock v. Firestone Tire & Rubber Co., 822 F.2d 623, 626 (6th Cir. 1987). Although deferential, the arbitrary and capricious standard is "not no review" and "[i]t is not . . . without some teeth." McDonald v. Western-Southern Life Ins. Co., 347 F.3d 161, 172 (6th Cir. 2003) (citations and quotations omitted). In reviewing an administrator's decision, the district court may only consider "the facts known to the plan administrator at the time he made his decision." Smith, 129 F.3dat 863.
In ERISA cases, the first step is to consider the instrument creating the right to the claimed benefit, i.e., the Plan. The Plan defines the benefits available and the mechanism for claiming them. Lowe's Homes Centers, Inc. ("Lowe's") provides a Group Health Care Plan for full-time employees and their dependents (Administrative Record ("AR") at 8). The cost is shared by Lowe's and its employees (Id.). Under the Plan, there is a 90-day waiting period before coverage begins (Id. at 8). In addition, employees must enroll within 120 days of their employment to be eligible for coverage (Id.).
The Summary Plan Description ("SPD") designates Lowe's as the Plan Sponsor, Administrator, and Claims Fiduciary (Id. at 6). Benefits are administered by Connecticut General Life Insurance Company ("CIGNA"). In addition, Lowe's has reserved the right to "suspend, withdraw, amend or modify the Plan, covering any active employee, current or future retirees or COBRA participants in the Plan, in whole or in part at any time" based solely on the decision of Lowe's management (Id. at 31). This section of the SPD states the insured will be advised of material modifications but does not require notice of ...